The Analyst: Omicron – The Grinch Who Stole Christmas

Ivo Favotto: Rise in summer vacation gives travel retailers hope we learn to live with COVID

AUSTRALIA / NEW ZEALAND. Ivo Favotto, Sydney-based executive and business owner who has worked for the three stakeholders of the Trinity ecosystem, presents his latest comments and figures on the gradual re-emergence of airport business activities in Australia and New Zealand in the context of a global pandemic crisis now entering its third year.

Favotto owns and operates The Mercurius Group, a consultancy firm focused on industrial research, consultancy and benchmarking, as well as operating its own business of delivering goods to destination.

In the latest edition of its unique monthly report tracing the takeover of 832 original travel outlets in Australia and New Zealand, Favotto discusses the impact of the omicron variant on what, until its emergence, had been a promising renewal.

December 2021 was supposed to be the month when things started to return to normal in bottom retail.

After all, double vaccination rates for all adults over 16 have finally reached the government’s 90% target in Australia and New Zealand. The Australian and New Zealand governments have pledged an easing of international border closures and state governments in Australia (except Western Australia) have pledged to reopen their borders so travel can resume – otherwise as usual, at least quite close to normal. Many airports in both countries were reporting that airlines had expected capacity to return beyond 2019 levels.

So it was with an air of optimism that travel retailers approached December 2021 – expecting a Christmas giveaway from resurgent travel due to pent-up demand. And obviously, the airlines’ air travel booking reports for November were in line with the script.

And then we all learned of a new letter of the Greek alphabet – Omicron – as a new variant of COVID-19 has led to a resurgence of infections, just months after some cities in the region suffered some of the longest shutdowns in the world. the world. While, according to most accounts, the Omicron variant appears to be a milder form of the disease than its predecessors, its highly infectious nature – even among highly vaccinated populations – has again dampened the demand for travel.

Although the surge in Omicron infections has not (yet) resulted in the reintroduction of border closures or lockdowns (except in New Zealand where some reopenings of international borders have been delayed), large sections of the population have resisted. nevertheless imposed restrictions. travelling.

In Australia, the sheer volume of new Omicron infections has also resulted in an almost complete breakdown of all the tools governments previously relied on to manage the pandemic – PCR testing, rapid antigen testing, contract research and monitoring. close / occasional contact. The breakdown of the very systems that people have derived some degree of comfort from that COVID-19 was under control appears to have seriously compromised the explosion in pent-up travel demand the industry has expected.

Slowing travel demand has also slowed the reopening rate of travel retail stores in Australia and New Zealand. According to the 20 of the Mercurius groupe Monthly report following the recovery of retailing in Australia and New Zealand after the pandemic, 56% of travel retail stores were open as of December 2021. Although this is good news in that ‘it’s up from 45% in November 2021, it seems like bad news because the industry was hoping for so much more.

Nonetheless, an 11-point increase in the number of outlets opened in just one month is positive, although reopens have yet to reach the highs recorded in May 2021 – just before the Delta variant wave that started in June. / July 2020.

In terms of outlet type, December 2021 saw the total number of open F&B outlets increase to 58% and the total specialist outlets increase to 54% – the biggest increase in specialty reopens since the start. of the pandemic.

Source: The Mercure Group. Click to enlarge.

Although 56% of outlets have generally reopened, this masks a significant difference between international terminals and domestic terminals. Around 71% of outlets in domestic terminals have reopened, but this figure is only 25% in their international counterparts.

The 71% include 76% for F&B outlets and 66% for specialist outlets. On the other hand, the 25% of points of sale opened in international terminals consist of 41% for duty-free shops, 22% for specialist shops (mainly essential products) and 20% for F&B.

There is a smaller difference between the proportion of locations reopened in Australia compared to New Zealand. In Australia, 53% of points of sale are open compared to 57% in New Zealand.

While Omicron might be the cranky guy who stole Christmas from travel retailers, several airports are reporting an increase in travel during the summer vacation period when borders have remained largely open, giving retailers of travels the renewed hope that we are learning to live with COVID.

Although still far from 2019 levels, a slight increase in air travel is nonetheless good news against the backdrop of depressing travel levels for many airports over the past two years.

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The story of two cities (continued)

Over the past seven months, the Mercurius Group has been tracking travel retail recovery rate after COVID-19 at two airports of similar scale located on different sides of the planet – Melbourne Airport in Australia and Melbourne Airport in Australia. Manchester in England.

At the start of our analysis in June 2021, Melbourne Airport had almost twice as many reopened retail stores compared to pre-pandemic level compared to Manchester Airport.

Source: The Mercure Group. Click to enlarge.

But as passenger traffic at Manchester Airport began to slowly recover (the number of passengers in November 2021 reached 54% of the level of November 2019), the number of open outlets stabilized at 60%. for the third consecutive month. With 60% of outlets open for 54% of passengers, there seems to be a slow and regular equalization of the outlets open to the number of passengers, resulting in a healthy and regular improvement in exchange conditions.

Melbourne’s airport opening rate has also stabilized over the past three months at 46%. In contrast, in October 2021 (latest data available), Melbourne Airport served less than 2% of 2019 passenger volumes. Trade in Victoria Airport, Melbourne, hit by lockdown, even with hours of reduced negotiation, could be more like the Hunger games for some operators with 46% of points of sale open (both in international and domestic areas) serving less than 2% of passengers.

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